Volvo Cars and Vargas portfolio company Northvolt have selected Gothenburg, Sweden, to establish a new battery manufacturing plant. The plant will commence operations in 2025, create up to 3,000 jobs and complement the planned R&D centre that both companies announced in December as part of an investment of approximately SEK 30 billion.

The new plant will significantly strengthen Volvo Cars’ electrification strategy as the company aims to produce and sell only fully electric cars by 2030. Construction of the plant will start in 2023 and it will produce state-of-the-art battery cells, specifically developed for use in next generation pure electric Volvo and Polestar cars. The plant will have a potential annual cell production capacity of up to 50 gigawatt hours (GWh), which would supply batteries for approximately half a million cars per year.

The partnership will focus on developing tailor-made batteries and vehicle integration concepts that give Volvo and Polestar drivers what they want, such as long range and quick charging times. Establishing deep vertical integration of battery development and production is important, since the battery represents the largest individual cost component in an electric car, as well as a major part of the carbon footprint.

The gigafactory in Gothenburg will accelerate the shift to electrification

Carl-Erik Lagercrantz, CEO of Vargas and Chairman of Northvolt, comments:

"The gigafactory in Gothenburg will accelerate the shift to electrification, and will be one of the largest battery cell manufacturing plants in Europe. This is clearly the kind of impact we aimed for when we co-founded Northvolt. Customer partnerships are in our DNA – and this is a prime example of how we at Vargas identify, validate, finance, launch and scale disruptive ideas. And how forward leaning commercial collaborations significantly reduce the environmental footprint of an industry.”